Telcos have sat on one of their most valuable assets for years—data. The data that runs through their infrastructure is like gold in an IoT data marketplace expected to reach US$3.6 trillion in value by 2030.

Their legacy in building networks, connectivity and data management positions telcos well for the opportunity. But they must move fast. By 2020, one in four large organizations will be either sellers or buyers of data via formal online data marketplaces.

Telcos know they need to capture their share of the IoT market, but many are hamstrung by the “how.”

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A viable entry strategy

For many telcos, the method of IoT market entry is a conundrum. IoT is an entirely new venture, a departure from their traditional business. Telcos need to first capitalize on their strong core muscle—connectivity—before tackling other areas of IoT value.

The key to success is establishing an ecosystem of industry verticals after establishing themselves as a capable, trusted IoT connectivity provider. After they have learned via single verticals, they can then focus on co-creating more complex use cases involving multiple verticals. Ultimately, it will be these complex, multi-industry applications that open true innovation and completely new value streams.

Telcos can unlock IoT data value by orchestrating a cross-industry ecosystem based on car connectivity data—improving the consumer experience, from insurance to dynamic parking.

Maintaining consumer trust is key

Telcos are a trusted provider, having proved themselves to consumers over years of service. But maintaining that trust is key.

The Accenture Strategy Competitive Agility Index quantifies the impact of trust on a company’s bottom line. Communication companies that face a material drop in trust can expect an average decline in revenue growth of 3 percent and a decline in EBITDA (earnings before interest, taxation, depreciation and amortization) growth of 10 percent. For a US$25 billion telco, that translates into a loss of US$750 million in future revenue. Building transparency and checkpoints into their consumer data strategy—throughout the ecosystem—will help telcos maintain the trust they’ve earned.

Moving forward

Winning telcos will build on their core capability of connectivity while parlaying the trust they’ve earned into partnerships and new growth in the IoT market. It means existing in parallel universes for a bit—the old and the “New”—but the eventual shift to the New is imperative to regain competitiveness.

Learning via single-industry use cases will help forward-looking telcos expand to more complex value, combining multiple industries in scenarios to provide value at entirely new levels. In doing so, leading telcos will consider a few overarching items:

Lead with your strengths

Become the go-to connectivity player and ecosystem partner. This move will position your company well for more complex future value.

Be honest with yourself on gaps

Historically the telco organization has been a stable, commodity-based organization with capabilities and incentives that fit that model. IoT requires different expertise with regards to vertical know-how and more consultative selling.

Make frenemies

Learning to work with companies seen as competitors—platform providers and the like—is essential for telcos. Those who can forge profitable friendships with companies they also compete with will move into the New much faster.

Mobilize the organization

Dedicate the time and resources needed to share the vision and embrace an ecosystem culture, which will likely be a change for many parts of the workforce.